defending the right to innovate
Monopoly corrupts. Absolute monopoly corrupts absolutely.
Copyright Notice: We don't think much of copyright, so you can do what you want with the content on this blog. Of course we are hungry for publicity, so we would be pleased if you avoided plagiarism and gave us credit for what we have written. We encourage you not to impose copyright restrictions on your "derivative" works, but we won't try to stop you. For the legally or statist minded, you can consider yourself subject to a Creative Commons Attribution License.
The graphic would be more awesome if the the lines thickness were weighted by something like market cap or customer deposits.
[Comment at 10/06/2011 10:17 AM by Anonymous]
The graphic would be even more awesome if the tie in to monopoly could be explained.
[Comment at 10/06/2011 05:17 PM by Anonymous]
Isn't the tie in to monopoly quite obvious? Where there once were 37 companies in a particular market, there are now just four. That's 1/9 as much competition as there was just 20 years ago. How can that possibly not be relevant here?
[Comment at 10/07/2011 08:37 AM by None Of Your Beeswax]
I see that. The issue I have is that the complaints here are typically related to government sponsored monopolies. If anything, the government has prevented further consolidation of the banking industry. Had the government not stepped in, it is quite possible there would only be one line on the chart above instead of four.
In some industries where margins are low or where investment costs are high, consolidation seems to be the trend regardless of whether government sponsored monopolies exist.
[Comment at 10/09/2011 06:11 PM by Anonymous]
Well, first of all, the site's name is just "Against Monopoly", not "Against Government-Sponsored Monopoly". And secondly, government regulations create significant artificial barriers to entry in the banking and finance sector. There's a whole damn regulatory *agency*, the SEC, just for them. Relaxing antitrust and similar regulations, without relaxing the ones that create the barriers to entry, results in what you see in the graph above. Back in the days of the Wild West there was little banking regulation at all and a diversity of players (but, no deposit insurance or other consumer protections to speak of, either).
Banking was better before a Republican congress started monkeying, in 1998, with the regulatory structure of the industry. If you examine the chart above there were only a few mergers before that -- and a ton in 1998 itself, and a ton more since then.
We also had had almost no significant market downturns since *World War II* until shortly after 1998. Recessions were weak and infrequent. Then there was a large recession in 2000 that evaporated *trillions* of dollars from the stock market, which was a pipsqueak compared to the mortgage meltdown in 2008 -- for two significant downturns in less than the next ten years. The latter has seen the largest percentage drop in GDP since the second world war ended and the highest unemployment rate since the *Great Depression*. It's also the longest since the Great Depression ... and still ongoing, to judge by the present unemployment rate which has still not dropped to pre-2008 levels.
To find comparably bad recessions farther in the past, you generally need bank failures, in quantity. Before 2008 the biggest bank failure event was the Great Depression. Before that, they, and bad recessions, happened frequently during the era of totally unregulated Wild West banking, but had become rare after banking regulation began ... aside from the Great Depression.
[Comment at 10/10/2011 07:36 AM by None Of Your Beeswax]
It would be interesting to see exactly what led to the mergers and also to see how that now plays with the SEC preventing further consolidations. Meaning, are there two different government intents now fighting with each other, one that encourages consolidation and one that prevents it?
I was quite amused to learn that prior to the Great Depression that bank failures en masse were a relatively frequent phenomenon. The bank failures seemed to occur for a variety of reasons, often leading to a domino effect. Sadly, depositors and investors frequently got caught in the failures, leading to widespread economic distress.
Government regulation may have decreased the frequency of such events, but it has not prevented them.
[Comment at 10/10/2011 06:28 PM by Anonymous]
In a bit of irony, the bill that was passed in 1999 (there was a temporary waiver in 1998) actually DECREASED government regulation. That decrease in government regulation caused banks specializing in different financial areas to merge.
Another thing that has encouraged banks to merge is that some of the merged banks were not all that strong financially. The weaker fish were eaten by the stronger fish. In the olden days, the weaker fish might have failed, only to be replaced by other weak fish.
The graph above is also slightly misleading. While the graph is focused on some of the largest banks in the United States, it neglects to point out that there are still more than 6,000 banks in the United States, with an average of 120 new startups each year for the last twenty years.
In spite of new entrants, as the government encourages stronger banks to support weaker banks and as the government seems intent on decreasing regulation, consolidation appears inevitable. FDIC information indicates that in spite of approximately 120 new entrants per year, and in spite of a decreasing number of failures, the number of banks in business is declining by hundreds per year because of consolidation, aided by decreased government regulation.
Here is a question: If the purpose of this site is to be against monopoly, and decreased government regulation causes a tendency toward consolidation, though perhaps not monopoly, and this site is also nominally against government regulation, how is the present consolidation of the banking industry slowed or stopped without government interference?
[Comment at 10/11/2011 08:27 AM by Anonymous]
By settling other planets, of course.
[Comment at 10/12/2011 09:34 AM by Greebey]
Most Recent Comments
Questions and Challenges For Defenders of the Current Copyright Regime It is one of the finest websites I have stumbled upon. It is not only well developed, but has good
at 06/19/2018 10:36 PM by Michael Jones
Killing people with patents I'm not really commenting the post, but rather asking if this blog is going to make a comeback
at 01/09/2018 03:46 AM by Anonymous
The right to rub smooth using a hardened steel tool with ridges Finally got around to looking at the comments, sorry for delay... Replying to Stephan: I'm sorry
at 05/08/2015 08:35 AM by Dan Dobkin
Let's See: Pallas, Pan, Patents, Persephone, Perses, Poseidon, Prometheus... Seems like a kinda bizarre proposal to me. We just need to abolish the patent system, not replace
at 04/10/2015 10:44 AM by Stephan Kinsella
The right to rub smooth using a hardened steel tool with ridges I'm a bit confused by this--even if "hired to invent" went away, that would just change the default
at 04/10/2015 10:34 AM by Stephan Kinsella
Do we need a law? @ Alexander Baker: So basically, if I copy parts of 'Titus Andronicus' to a webpage without
at 01/08/2015 08:58 PM by Sheogorath
Do we need a law? The issue is whether the crime is punished not who punishes it. If somebody robs our house we do
at 11/17/2014 04:48 AM by David K. Levine
Do we need a law? 1. Plagiarism most certainly is illegal, it is called "copyright infringement". One very famous
at 10/29/2014 10:49 AM by Alexander Baker
Yet another proof of the inutility of copyright. The 9/11 Commission report cost $15,000,000 to produce, not counting the salaries of the authors.
at 09/20/2014 03:19 PM by Alexander Baker
WKRP In Cincinnati - Requiem For A Masterpiece P.S. The link to Amazon's WKRP product page:
at 06/28/2014 10:03 AM by Doris
WKRP In Cincinnati - Requiem For A Masterpiece Hopefully some very good news. Shout! Factory is releasing the entire series of WKRP in Cincinnati,
at 06/28/2014 10:00 AM by Doris
What's copywritable? Go fish in court. @ Anonymous: You misunderstood my intent. I was actually trying to point out a huge but basic
at 05/05/2014 01:03 PM by Sheogorath
Rights Violations Aren't the Only Bads I hear that nonsense from pro-IP people all the
at 04/07/2014 04:47 AM by Dan McCracken
Intellectual Property Fosters Corporate Concentration Yeah, I see the discouragement of working on a patented device all the time. Great examples
at 01/13/2014 06:13 AM by Anonymous
Music without copyright Hundreds of businessmen are looking for premium quality article distribution services that can be
at 11/28/2013 05:03 PM by Stephanie Smith
at 11/28/2013 09:23 AM by Anonymous
at 11/28/2013 09:22 AM by Anonymous
Patent Lawyers Who Don't Toe the Line Should Be Punished! Moreover "the single most destructive force to innovation is patents". We'd like to unite with you
at 11/24/2013 10:48 AM by SpaceCorp Technologies
at 11/20/2013 03:18 PM by Anonymous
Does the decline in total factor productivity explain the drop in innovation? So, if our patent system was "broken," TFP of durable goods should have dropped. Conversely, since
at 11/02/2013 08:09 PM by Anonymous